Background Negative attitude and discriminatory behavior of health professionals constitute a major obstacle in psychiatric care and have been pointed out as a key issue in working with mental illness. Understanding about the attitude of nurses is crucial for quality and holistic care of psychiatric services and essential for the successful integration of mental health into primary health care. However, there is a paucity of study to examine the attitude of primary health care nurses towards severe mental disorder in Ethiopia. Therefore, this study aimed to assess the attitude of primary health care nurses and its associated factors towards people with severe mental illness in Addis Ababa. Methods Institutional based cross-sectional study was conducted among nurses working at primary health care in Addis Ababa from May to June, 2018. Multistage sampling technique was used to select 634 participants. A structured self-administered questionnaire was used. Data were coded and entered into EPIDATA 3.1 and exported to SPSS version 20 for analysis. Bivariate and multivariate binary logistic regression analysis was used to identify factors associated with attitudes of nurses in primary health care. The level of significance was declared at P-value < 0.05 with 95% confidence interval. Results A total of 610 respondents were included in the study with a response rate of 96.2%. The mean age of participants was 28.6 ± 5.9 (SD) years and the prevalence of negative attitude was 48.2%. Multiple logistic regression models revealed that respondents who have diploma [AOR = 3.09, CI (1.20–7.95)], work experience of < 5 years [AOR = 4.49, CI (2.37–8.49)], respondents who didn’t took mh-Gap training [AOR = 4.92, CI (3.05–7.95)] and poor knowledge about mental illness [AOR = 2.84, CI (1.82–4.44) were associated with negative attitude towards people with severe mental illness. Conclusion Nearly half of the participants have negative attitude towards people with severe mental disorders. Therefore, evidence based and contextualized models are warranted to mitigate negative attitudes of primary health care nurses.